Shell Arctic spill contingency plans in Alaska survive challenge

A divided federal appeals court onThursday rejected an effort by a coalition of environmentalgroups to revoke federal approval of Royal Dutch Shell plc'soil spill response plans related to drilling onAlaska's remote Arctic coast.

By a 2-1 vote, the 9th U.S. Circuit Court of Appeals saidthe Bureau of Safety and Environmental Enforcement (BSEE), which ispart of the Department of the Interior, acted lawfully inapproving the plans, which relate to Shell oil leases in theBeaufort and Chukchi seas from 2005, 2007 and 2008.

It rejected arguments by environmental groups such as theNational Audobon Society, the Natural Resources Defense Counciland the Sierra Club, that the approval was "arbitrary" and"capricious," based on Shell's unsupported assumption that itcould recover 90 percent to 95 percent of any oil spilled.

Many environmental advocates oppose drilling in the Arcticon concern that any spill might prove difficult to clean up.

Shell hopes to resume Arctic fossil fuel exploration as soonas next month, having put it on hold following a mishap-laden2012 drilling season.

The company, with offices in London and the Hague, wonfederal approval in early 2012 for its spill plans, which itupdated after the April 2010 explosion of the Deepwater Horizonrig in the Gulf of Mexico. That disaster has cost rival BP plctens of billions of dollars.

Writing for the 9th Circuit majority, Circuit JudgeJacqueline Nguyen said the BSEE lacked discretion to rejectShell's plans because they complied with federal oil pollutionlaws.

She also said Shell never made, and the BSEE did not relyon, an assumption about the company's ability to clean up oil.

Circuit Judge Dorothy Nelson dissented, faulting the BSEE'sfailure to consult with environmental agencies to ensure Shellcomplied with laws protecting endangered species and habitats.

Thursday's decision upheld an August 2013 ruling by ChiefJudge Ralph Beistline of the federal court in Anchorage.

Shell spokesman Curtis Smith called the decision "welcomenews," adding: "We look forward to receiving the remainingpermits necessary to commence exploration activities offshoreAlaska in the weeks to come."

Holly Harris, a lawyer for Earthjustice representing theenvironmental groups, did not immediately respond to requestsfor comment.

The U.S. Department of Justice, which defended theBSEE approval, did not respond to a request for comment.